Government-promoted bad bank National Asset Reconstruction Company (NARCL), via its newly formed ARC, has made an offer for a loan of troubled steelmaker giant Mittal Corp, which has triggered a Swiss challenge auction. The bad bank has put forward an offer of Rs 228 crore for Mittal Corp debt held by public sector banks (PSBs).

As the lenders have put the debt on the block, the NARCL would have the right to match any counteroffers. Also, the report stated that around 89 per cent of Mittal Corp’s outstanding debt is accounted to state-owned banks, whereas the rest amount of around Rs 173 crore (11 per cent) is under the hold of Asset Care & Reconstruction Enterprise (ACRE), an ARC backed by Ares SSG Capital.

Currently, the offer made by NARLC for Mittal Corp is undergoing insolvency proceedings and would be around Rs 256 crore, including ACRE’s claims. The bad bank’s anchor offer compromises of 15 (per cent) as cash payment and the balance in the form of security receipts (SR) guaranteed by the government.

As per the report, by October 6, lenders have invited expressions of interest, and the Swiss auction is to be held on October 20. And at least two counterbids are expected by PSBs at the Swiss auction. The offer equates to recovering an estimated amount of Rs 1,414.5 crore (16 per cent).